'Cop26 targets pushed back under threat of being sued', 14 January 2022

• Cop26 ambitions have added to the pressure for countries to dramatically reform or exit the 30-year-old international Energy Charter Treaty (ECT).
• The EU is home to €345bn of assets protected by the ECT, under which investors can sue governments if they feel policy drafting has been unfair.
• Governments must mould climate policy decisions around the needs of foreign fossil fuel companies or face billions of dollars’ worth of lawsuits.

"Governments’ Cop26 and other climate commitments are effectively being tailored to suit fossil fuel companies due to the Energy Charter Treaty, an investment pact that should be abolished, argue non-governmental organisations (NGOs) and academics.

Under the 30-year-old agreement, companies and their shareholders can sue foreign governments if they feel they have not been treated fairly in policy decisions relating to fossil fuel assets. Often out-of-court and opaque, such proceedings – known as investor-state dispute settlements (ISDSs) – can result in millions of dollars of damages being awarded.

The Energy Charter Treaty (ECT) protects some €345bn ($396bn) worth of fossil fuel infrastructure in the EU (see chart below). Most of the 145 cases to date have ruled in favour of investors, and around 80% have been brought in the past ten years. More are expected as climate scientists stress the need for rapid policy action to phase out fossil fuels.

Some governments are heeding those calls to action despite the threat of lawsuits – but the treaty is influencing how they do so..."